Maximizing WiMAX : Capability Document

Frost and Sullivan

ICT Practice
2008 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan.
No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

Contents

Why Frost and Sullivan ?

What we can do for you

Case studies of what we have done

Why Us ?
Our Telecom Coverage
Wireless
Services

Business Communications and

Managed Services

Wimax Opportunity

Strategic Analysis of the Managed

and Hosted Services Opportunity

Online Content Services

Market

APAC Wireless Emerging

Market Outlook

Digital and Interactive

Media

Fixed Line Networks

Broadband Access Technology

and Market Comparison Report

Managed Hosting : Going beyond

Co-Location

APAC Location Based

Services Overview

IPTV Business Case

Online Advertising and

Managed and Hosted

Search Marketing

Communication : Driving value

Mobile Advertising Models
3G Dongles

Converged Service Strategy

Managed and Hosted Security:

Digital Convergence

Strategic Differentiator for telcos

Strategy
Network Transformation

Mobile Broadband Landscape

Assessment and Implications

WAN Services
Best practices in

Mobile Devices Outlook

Monetization and Marketing

Vendor Assessment and

Profiling

Mobile Content
Femtocells

Continuous Tracking of the WiMAX and Mobile broadband markets

3

Why Us ?
Capabilities of Frost and Sullivan

Insights

Experience

3G and wireless broadband

strategies of most global
operators
Service portfolio covering
content, LBS and advertising
Evolution of emerging markets
and related customer behaviour
Touchpoints with marketing
teams of major operators
Understanding of OSS-BSS
requirements of operators

Consulting projects related to

services launches for
developed market operators
and emerging market operators
Wireless broadband strategy
and implementation plan
IPTV Business plans and value
chain analysis of Digital Media
and Mobile Content
Projects with Korean operators
on innovative business models
Financial models to present to
investors

Envisaging the right service

and technology mix

Ensuring the right return on

investment

Expertise

Our team of analysts and

consultants has a mix of
network rollout experience with
vendors, strong strategy
planning experience with
operators and knowledge of
industry dynamics
The above combination helps
us provide a robust and
realistic perspective and
assistance if necessary

Enabling the right

implementation approach

Confidential

Why Us ?
WiMAX Capabilities of Frost and Sullivan

Our Experience

How it can help you?

We have helped the largest WiMAX player in South East

Asia on its go-to-market and positioning strategy

Design your marketing and

competitive strategy ( with HSPA)

We have helped a large North Asian operator evaluate

WiMAX investments and perform due diligence on business
plans of operators in 5 Asian countries

Seek investors
Validatie business plans

We have helped a large Japanese operator in their end-to

end market evaluation to enter a particular geography

Design the consumer value

proposition and pricing

We have assisted in the business and investment plans of

several wireless broadband operators

Create the business plan and

investor memorandums
Implementation assistance

We understand the technology vendors like ALU, Huawei

Evaluate vendors
Network rollout
Confidential

Clientele
Capabilities of Frost and Sullivan

Asia Pacific Operators

Vendors

Govt Agencies and Regulators

Confidential

Contents

Why Frost and Sullivan ?

What we can do for you

Case studies of what we have done

Confidential

What we can do
Our Approach
We have a 3 pronged approach to help WiMAX operators succeed
Section 1 :
Market Assessment and
Competitive Strategy Design
Competitive
Dynamics

Technology
Mapping / 3G
Fixed Wimax

Consumer
Behavior and
adoption
drivers
Service
Offering and
Segmentation

Section 2 :
Business plan and
Investment plan
Revenue Model
Cpst Model : Capex/Opex
NPV / Payback Analysis
Scenario Analysis

Pricing Strategy
Rollout Plan

Section 3 :
Implementation Assistance
Detailed Implementation Plan
Vendor Assessment
Marketing and Distribution
Readiness Assessment
Network and Infrastructure
Readiness esp. Billing and
cuistomer service

Coverage/Geography

Desired outcomes

Desired outcomes

Desired outcomes

Consumer adoption drivers

Subscriber and Revenue

Forecasts

Complete end-to-end readiness and

implementation plan

Service strategy : including

pricing, speeds, segments
and coverage areas

Detailed Business Plan *

Choice of vendors

Financial Model

Network and Operating Strategy

Competitive positioning

Risk factors

Device Strategy

* Where operator has created cbusiness plan we can validate it

Confidential

Section 1: Market Assessment and Competitive Strategy Design

Understanding consumer adoption factors for WiMAX
We will analyze the key consumer adoption factors for WiMAX services

What are the most compelling reasons for your subscription to the XW1MAX service?
80
70

78

A significant proportion of
adoption has also been by
early adopter customers who
like trying out new services

60

60
50

45

40
30
20
10

26
20

17
11
5

H
ig
h

Sp
W eed
ire
A
le
ss cce
ss
Ju
Fr
st
ee
w
do
La ant
m
e
te
d
st
C
to
on
te
ne
ch t r y
ct
no
iv
lo
i ty
G
/N
r e gy
at
et
R
w
Pr
E
at
o
ot
xc
rk
e
ec
el
W
s
ta
le
te
i
d
bi
nt
d
e
li
Pr
C
Q
15
o v ty
ua
iv
a
er
li t
D
cy
y
ag
ay
of
an
e
s
d
Se
S
er
H
rv
ig
vi
ic
h
ce
e
S
Sa
ec
u
tis
Pl
fa
ug ri ty
ct
io
&
Pr
n
Pl
om
12
G
ua ay
pt
H
ou
ra
an
nt
rs
N
ee
om d H
Se
e
ad
lp
rv
O
fu
i
ic
th
l C ce
er
U
sa
s
us A c
tiv
ge
to
a
m
(P
ti
or er S on
ta
up
bl
po
e
Fl
ex r t
ib
ilit
y)

n=100
Multiple Response

Most servicing
related planks /
features did not
seem to have a
great influence
over first time
adoption
however, as we
will see later,
these came up
high as retention
factors

Confidential

Section 1: Market Assessment and Competitive Strategy Design

Competitive strategy design
Our competitive strategy design is comprehensive and helps maximize demand for WiMAX
services
Pricing vs Speeds design

Other Marketing Issues

Which geographical areas

is the fixed line coverage
weak ?

3.6 Mbps

Options for
WiMAX
players

Positioning : Price vs
Service levels vs lifestyle

1 Mbps
Devices and Subsidization
especially netbooks

Followed by players like

PacketOne in Malaysia,
Pricing per month
Fixed line players
3G/HSDPA players

Pricing that maximizes

demand
Learnings from other global
operators

Confidential

10

Section 2: Business Plan and Investment Plan

Business Plan
Our WiMAX business modeling is based on this integrated approach that clearly outlines the
various interlinkages and dynamics
What needs to be provided
Service goals

What cannot be avoided

Operating

Accessibility
Scalability
Quality

Constraints
Capital Productivity

Business
Plan

Opex Model

Service Strategy

Strategy

Technological Feasibility

Investment
Thesis

Regulatory & Risk

Mitigation Strategy

Innovation

Uncertainties

New services
New price performance
levels

Regulation
Demand
Competitive intensity

Customer Acquisition Strategy

Confidential

11

Section 2: Business Plan and Investment Plan

Investment Plan
Our WiMAX business modeling is based on this integrated approach that clearly outlines the
various interlinkages and dynamics
Development of Business Case

Frost &
Sullivan
Expertise

Cash Flows
(NPV)

Investments
Strategic decisions

Key influencers of the strategy

Business Model Assumptions

Services Strategy

Service drivers
Consumer Preferences
Global case studies
Indianization

Adoption/Uptake of services
Pricing of services

Customer Acquisition
Strategy

Handset subsidization
Marketing and promotion
Competitive differentiation

SAC costs
Marketing costs
Subscriber forecasts

Operating Strategy

Network rollout plan

Business architecture

Network Expenditure
SCE
G&A

Regulatory & Risk

Mitigation Strategy

Financial value
Risk appetite

Hurdle rate
Market share
Regulatory charges

Client Inputs

Operational
& other
expenses

Revenues

Marketing
Pricing
scenario

Subscriber
base
Network

Competition

Manpower

Market
size &
growth

Business Strategy:
Marketing
Product Development
Investment

Confidential

12

Section 2: Business Plan and Investment Plan

Investment Plan
Our WiMAX investment plan also calculates all financial metrics and its impact to key scenarios
and risk factors
Illustrative

Sensitivity and scenario analysis to key metrics

Sensitivity Analysis : Valuation

Key Assumptions

-1000 -500
1

Factor 1: Price growth

70

Factor 5: Raw material cost increase

High

Factor 6: Exchange rate

30
2008

2009

2010

2011

3
1

Factor 7: Cost of acquisition

Factor 8: Growth in marketing costs

Low
Base
High

2007

2008

2009

2010

2011

Base

Low

Valuation

High

Sensitivity Analysis : Key Variables

Enterprise: New customers added

35
30
25
20
15
10
5
0

1
3

Base

2007
New customers added/ yearh

Factor 4: Salary Inflation

50

Factor 3: Market growth

Low

2000

Factor 2: Market share

90

% Deviation from base case

ARPU projections

Consumer ARPU: $/month

Assumptions for ARPU

Base: $400 Mn
0
500 1000 1500

40%
NPV= 0 Mn $
NPV= 500 Mn $

30%
20%
10%
0%
-10%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

-20%
-30%
% Deviation from base case subscriber projections

Confidential

13

Section 3: Implementation Assistance

Getting ready for WiMAX
The following operating assistance can help WiMAX players avoid common mistakes made in
operational zing their plans
Key Areas

Detailed deliverables

Network / Rollout
Plan

Number of base-stations
Provisioning and capacity planning
Trials and Pre-launch

Process Design

Definition of process capabilities and metrics for key

customer facing processes like ordering, installation,
billing, CRM
Design of key processes
Cost implications and competitive factors

Vendor Evaluation

Creation of RFP
Network,
OSS BSS
Vendor Solicitation and Evaluation

Operating Strategy

Organization Structure
Detailed Operating plan
Capabilities Creation
Confidential

14

Contents

Why Frost and Sullivan ?

What we can do for you

Case studies of what we have done

Confidential

15

Project Snapshot

Case Study: 1

Evaluation of WiMAX opportunities in ASEAN for Korean operator

Country

Client Situation

Client was looking at

Malaysia,

acquisition opportunities in the

region for WiMAX operators

Engagement Objectives

Segmenting the potential wireless

broadband consumer and
enterprise market

Thailand,
Indonesia
Vietnam
Philippines

Client

Korean operator

Client needed a thorough

understanding of regulation,
competitive dynamics , market
potential and strategies of
various operators

Conducting primary interviews

within the identified segments

Understanding the competitive

landscape for wireless broadband
services

Client also wanted to identify

unmet needs in the consumer
market to know the value
proposition desired by wireless
broadband users

Identify the right capacity plans and

network rollout approach

Evaluate the business case for

Client also wanted to know the

WiMAX

challenges in competing with

fixed broadband

Deciding on investment targets : go

no-go due diligence on potential
acquisitions
Confidential

16

Project Modules

Case Study: 1

Analysis of .WiMAX investment opportunities

16 Weeks

Complete
Market
Study

Supply side and

demand side
analysis

Regulatory issues

Consumer survey

Analyzing the competitive

environment

Capturing wireless
broadband usage, needs
and purchase patterns

Identifying drivers and

restraints of growth

10 year forecast of market
sizes

WiMAX
business case

Revenue model

Opex and capex
models

Capturing attitude towards

a new service

Operator strategy

Target
screening and
due diligence

Discussions with bankers
and targets

Comparison with ideal

business plan

Investment justification

Recommendations

Network and distribution

Confidential

17

Project Snapshot

Case Study: 2

Residential customers & enterprise research for a potential WiMax service for an operator evaluating the
Singapore market
Country

Client Situation

Client was contemplating launching

Singapore

of wireless broadband services in

one South East Asian country, for
both the residential and enterprise
users

Client needed an thorough

Client

understanding of the dynamics of

the residential customers such as
behaviour, price points, decision
making process & influencers etc.

Client also wanted to identify unmet

needs in the enterprise segment so
that it could effectively roll out it
wireless broad band offerings
Japanese operator

Engagement Objectives
Segmenting the potential wireless
broadband consumer and enterprise
market

Conducting 900 primary interviews within

the identified segments

Understanding the competitive landscape

for wireless broadband services

Developing a complete understanding of

the users by analyzing the usage, needs,
attitude and purchase patterns

Identifying lucrative target segments and

favorable positioning to enter them

Formulating a detailed marketing plan

complete with product, price and
promotion configurations and integrating
that plan with overall corporate strategy

Confidential

18

Project Modules

Case Study: 2

Residential customers & enterprise research for a potential WiMax service for a leading telecom operator
in Japan.

16 Weeks

Complete
Market
Study

Consumer
Survey

Sizing the potential and

addressable wireless
broadband markets

Survey of 900 consumer

and enterprise
respondents

Analyzing the competitive

environment

Capturing wireless
broadband usage, needs
and purchase patterns

Identifying drivers and

restraints of growth

10 year forecast of market
sizes

Capturing attitude towards

a new service

Target
Segment
Identification

Identification the most
lucrative consumer and
enterprise segment for
offering wireless
broadband services

Marketing Plan
Development

Developing product, price

and promotion strategies

Developing tactical
implementation details
complete with timelines

Developing a
positioning statement

Confidential

19

Project Benefits

Case Study: 2

Residential customers & enterprise research for a potential WiMax service for a leading telecom operator
in Japan.
Client Benefits

Detailed competitive analysis

Identification of the most lucrative target segment
out of the potential market segments

Thousands

5000
4000
3000
2000

120

1000

100
SGD (Million)

broadband market in all the identified consumer and

enterprise segments

6000
Business Travelers

Sizing of both potential and addressable wireless

Sample Output

100

100

99

95

90

80

2005 2006 2007 2008

86

81

2009 2010 2011

77

73 201569
2012 2013 2014

Ye ar

60
Potential Market Size

40

Addressable Market Size

20
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Year

Detailed marketing plans for each of the market

Revenue from Business Travelers

Business
Traveler

segment

Leisure
Traveler

Mobile
Professionals

Home
Users

Students

Customized
Handhelds

Backhaul
Access

Measurable
Sustainable

Implementation details and proposed timelines for

market entry

Differentiable

Value Proposition: Most convenient and the simplest Wireless

Broadband Service, at competitive prices

Flank Attack

Accessible

Service Concept

Pricing

Promotions

Prepaid billing

Pay-per-use 24-

Subsidized access

Channels

Actionable
Overall Effectiveness

WiFi + WiMAX

(near term)/Pure
WiMAX (long
term)
1Mbps
Basic & Premium
Packages

hr usage time
SGD 18
(Basic)/20
(Premium) per
24-hr usage

devices for longterm contracts

(with large MNCs)
Free trials
Rebates for
unused usage
hours (from
competing
providers)

Confidential

Airport

Hotels

Corporate
Channel

20

Our Value Proposition Case Study

Case Study: 3

Engagement Snapshot.

Country

Client Situation

Objectives

Conduct secondary research into the broadband

Client had no prior experience in launching
consumer solutions and wanted Frost to
assist them in defining a market entry
strategy
Malaysia

Clients product development and

Client

marketing wanted to conduct a concept test

for their product packaging and marketing
strategies

market in Malaysia to get a better understanding

of the competitive environment in Malaysia.

Define market entry strategy that includes the

following:

Product packaging and pricing

Solution branding
Distribution strategy
Partnership strategy

Conduct end user test to test products service

quality and customer satisfaction.

Client needed to defining target market and

relevant customer acquisition strategies
A New Wimax Operator

To identify key markets client can target.

Confidential

21

Our Value Proposition Case Study

Case Study: 3

The engagement entailed unique challenges due to its nature and scope. We were able to navigate these
challenges and deliver successfully, drawing on varied skill sets.
Key Challenges

Project had to be completed in very demanding

timeline within less then 3 weeks.

Our Value Proposition

Extensive experience in conducting consumer

research especially FGDs and end user test. Frost
was able to re use a lot of its structured formants in
conducting FGDs and giving clients optimum results.

Study was conducted via 6 different focus groups with

different qualifying criteria. The FGD was used to
collect many data points as well conducting a concept
testing.

Strong knowledge of the Malaysian

telecommunications market especially in new services
such as Wimax, FTTH and 3G via various in house
publications and custom research engagements.

Project was conducted in 2 phases with the FDGs

before service launch and end user test after friendly
users were identified.

Strong expertise in the ICT industry

Confidential

22

Our Value Proposition Case Study

Case Study: 3

The engagement brought the following benefits to the client.

Malaysian Market
Landscape

Client received a complete market assessment

complemented by:

Target market
Product positioning (services packaging and
pricing)
Customer acquisition strategy
End User Study

This assessment was ably supported by qualitative

understanding of key factors driving customer adoption
of Wimax services in Malaysia
Market Entry Strategy

Market entry strategy was developed considering

potential target market, competitive matrix and service
value proposition.

End user test allowed client to gauge acceptance of

service offering provided by Wimax service provider

Confidential

23

Our Value Proposition Case Study

Case Study: 4

Engagement Snapshot.

Country

Client Situation

Objectives

Verify key business model assumptions

Client has been deploying a proprietary
wireless broadband network in Malaysia

employed by service provider:

Target market
Potential subscriber base
Technology and operations strategy
Subscriber acquisition strategy

Client was looking at a due diligence study

Malaysia

to be shown to potential investor which is a

publicly traded company

Validation of financial model and conducting

stress test on key assumptions

Client

Client needed its business plan and market

acquisition strategy validated by an
external industry acknowledged consulting
organization

Valuation of company based on industry

standards

A Wireless Broadband Service Provider

Confidential

24

Our Value Proposition Case Study

Case Study: 4

The engagement entailed unique challenges due to its nature and scope. We were able to navigate these
challenges and deliver successfully, drawing on varied skill sets.
Key Challenges

Project had to be completed in very demanding

timeline within less then 2 weeks.

Our Value Proposition

In depth understanding on business model and

financial parameters impacting a telco service
provider

Study was conducted via face to face interviews of

senior management of service provider in order to
understand clients business model

Strong knowledge of the Malaysian

telecommunications market especially in new services
such as Wimax, FTTH and 3G via various in house
publications and custom research engagements.

Project required creation of financial valuation for a

company which has only one year of tract record and
based on forecasted revenues

Strong background and experience in business case

development and validation especially for the
telecommunication industry

Confidential

25

Our Value Proposition Case Study

Case Study: 4

The engagement brought the following benefits to the client.

Market Potential Validation

Client received a complete assessment of its business

plan factoring the following:

Business Plan Validation

Potential subscribers
Market acquisition strategy
Operations strategy
Technology strategy

The financial model was evaluated in detail and various

sensitivity models were run varying various possible
business assumptions
Financial Model Validation

Valuation of company based on industry acknowledged

standards.

Key success and risk factors facing company in its

growth assumptions and strategies

Confidential

26

Project Snapshot

Case Study: 5

Market entry assessment into Polands Wimax market

Country

Client Situation

The consortium is in the process of

Poland

Client

Objectives

To provide detailed background information on

the Polish telecommunications market.

investigating the feasibility of a Wimax

investment in the Polish
telecommunications market.

To provide the relevant inputs to enable the

Before this investment can take place the

To provide the benefit of Frost & Sullivans

consortium need to conduct a detailed

assessment of the Polish
Telecommunications market.

population of a strategic business plan.

strategic insights into the Polish

telecommunications market.

Frost & Sullivan has been retained to

conduct this assessment.

A North Asian Consortium of comprising

of a Leading Telecommunications
Service Provider and a large
Conglomerate

Confidential

27

Project Modules

Case Study: 5

Market entry assessment into Polands Wimax market

Key Challenges

Establishing the demand characteristics and the right

segmentation for a relatively undefined market

Developing the right hypothesis and developing the

possible competitive scenarios from other players who
may potentially play in the Wimax market

Developing key operating considerations that need to

be accounted to enable the client to navigate into a
market for the first time

Our Value Proposition

High level of familiarity coupled with well tested

marker segmentation methods for the Poland market

Rigorous competitive players database to provide

complete picture of the supply side dynamics and
sound scenario planning expertise to simulate the
competitive reaction to the client

Provided operating model checklist recommendations

that facilitated sound decision making

Confidential

28

Project Benefits

Case Study: 5

Market entry assessment into Polands Wimax market

Demand Side Mapping

Detailed profiling addressable Wimax market for

Users by purpose of Internet access

consumer and enterprise segments and their usage

preferences

Selling on the auctions

Looking for a job
Calls, videoconferencing
Banking services

Geographic mapping of demand distribution and also

TV/radio on-line

supporting infrastructure by the key provinces across

Poland

Tourist information
Healthcare information
e-newspapers
Games (download, on-line), content download

In depth analysis on regulators position and sentiments

Social networking, chats

of key potential players for Wimax

Looking for information

E-mail
0

10

20

30

40

50

60

% of respondents

Detailed competitive analysis on the potential

Supply Side Mapping

Table by carrier

Key players and strategies

Reference Interconnection Offer (RIO):

The table below presents the rates (in PLN) for the year 2008 for interconnection settlements
per call minute originated on the incumbent network.
Zonal [PLN/minute]
RIO 2008
Call
Termination
Call
Origination

In Transit Area [PLN/minute]

Outside TrA [PLN/minute]

O1*

O2

O3

O1

O2

O3

O1

O2

O3

0,0273
($ 0.0126)

0,0205
($0.0095)

0,0137
($0.0063)

0,0325
($0.015)

0,0243
($0.01122)

0,0162
($0.0075)

0,0478
($0.0220)

0,0368
($0.0169)

0,0239
($0.0110)

0,0273
($ 0.0126)

0,0205
($0.0095)

0,0137
($0.0063)

0,0325
($0.015)

0,0243
($0.01122)

0,0162
($0.0075)

n/a

n/a

n/a

*O1 W orking days from 08:00 until 18:00; O2 Saturdays, Sundays and other legal holidays from
08:00 until 18:00; O3 from 18:00 until 08:00
F2M:
The table below presents the average rates (in PLN) in the year 2006 for interconnection
settlements per call minute originated on fixed networks and terminated on mobile
networks payable to the mobile network operator

Operator name

T1*

T2

T3

PTC

0.44
($0.203)

0.44
($0.203)

0.40
($0.185)

PTK Centertel

0.65

0.48

0.40

($0.30)

($0.22)

($0.185)

0.44
($0.203)

0.44
($0.203)

0.40
($0.185)

Polkomtel

Play is the newest and the smallest player on the

market.
Its target group are prosperous young people that have
an affinity with the newest technology.
Plays 3G services are the main incentive for the users
to churn.
3G Market Shares - 2007
Centertel
95,000

PTC

Play

112,000

426,000

competitors in the space which covers:

Business model
Infrastructure conditions
Partnerships and alliances
Competitive capabilities

Implementation details and proposed timelines for

market entry:
Compliance requirements
Possible positioning and partnership strategies
CAPEX and OPEX modeling
Milestone mapping for rollout roadmap

Polkomtel
*Working days: T1 from 08:00 until 18:00; T2 from 18:00 until 22:00; T3 from 22:00 until 08:00
Saturdays, Sundays and other legal holidays: T2 from 08:00 until 22:00; T3 from 22:00 until 08:00

249,000

Confidential

29

Global Growth Consulting Company

30